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Digital Power Corp Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Digital Power Corp (DPW) filed Quarterly Report for the period ended 2010-09-30.

Digital Power Corp has a market cap of $13.9 million; its shares were traded at around $2.09 with and P/S ratio of 1.8. DPW is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Our revenues increased by 86.5 % to $3,186,000 for the three months ended September 30, 2010, from $1,708,000 for the three months ended September 30, 2009. The increase in revenues is mainly due to higher sales of our standard and custom design commercial products and our military products. During the three months ended September 30, 2010, we generated revenues from the sale of a fully customized product solution for the medical market, as part of our earlier strategy to transition away from a dependence on standard, commodity products. In addition, during this period, we successfully delivered one of our major military projects. Revenues from sales of our commercial products during this period increased by 100.2% to $2,246,000 for the three months ended September 30, 2010, from $1,122,000 for the three months ended September 30, 2009. Revenues from sales of our military products increased by 60.4% to $940,000 for the three months ended September 30, 2010, from $586,000 for the three months ended September 30, 2009. The increase in our revenue from our military products was mainly due to the delivery of one of our major defense projects.

For the nine months ended September 30, 2010, our revenues increased by 17.7% to $7,324,000, from $6,224,000 for the nine months ended September 30, 2009. Revenues from sales of our commercial products increased by 37.7% to $5,602,000 for the nine months ended September 30, 2010, from $4,069,000 for the nine months ended September 30, 2009. Revenues from our sales of military products decreased by 20.1% to $1,722,000 for the nine months ended September 30, 2010, from $2,155,000 for the nine months ended September 30, 2009. The decrease in revenues of our military products is mainly attributable to differentials in the phasing of such large capital projects.

Engineering and product development expenses were $161,000, or 5.1% of revenues, for the three months ended September 30, 2010, compared to $136,000, or 8.0% of revenues, for the three months ended September 30, 2009. Engineering and product development expenses were $429,000, or 5.9% of revenues, for the nine months ended September 30, 2010, compared to $405,000, or 6.5% of revenues, for the nine months ended September 30, 2009. The increase is attributable to salary-related expenses due to the fact that during the three months ended September 30, 2009, we had a temporary decrease in salary-related expenses.

Financial expense was $79,000 for the three months ended September 30, 2010, compared to financial income of $26,000 for the three months ended September 30, 2009. Financial expense was $56,000 for the nine months ended September 30, 2010, compared to financial expense of $46,000 for the nine months ended September 30, 2009. From time to time, we enter into forward contracts to hedge certain sales transactions which are denominated in foreign currencies. The change in financial results was due to foreign currency fluctuations during the respective periods and changes in the fair value of forward contracts.

On September 30, 2010, we had cash and cash equivalents of $2,398,000 and working capital of $3,276,000. This compares with cash and cash equivalents of $2,967,000 and working capital of $3,487,000 at December 31, 2009. The decrease in cash and cash equivalents is due mainly to the completion of the purchase of a technology for a consideration of $480,000, and to an increase in trade receivables and in inventories, offset by increases in accounts payable, related parties-trade payables, deferred revenues and other current liabilities. The decrease in working capital is mainly due to a decrease in cash and cash equivalents, offset partially by an increase in inventory and in trade receivables.

For the three months ended September 30, 2010, we had an operating income of $382,000 and a net income of $303,000; for the nine months ended September 30, 2010 we had an operating income of $330,000 and a net income of $274,000, and for the year ended December 31, 2009, we had an operating loss of $102,000 and a net loss of $148,000. Although we have actively taken steps to increase our revenue and reduce our costs, we may incur operating and net losses in the future unless we continue to increase revenues by selling current and custom design products, transitioning to production stage of our custom design products and decreasing manufacturing costs through a greater use of contract manufacturers in Asia and other strategic locations.

Read the The complete Report

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10qk
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